New shape of the manufacturing sectorThe crisis of manufacturing sector in Korea is no news. A new paradigm shift in manufacturing business through innovative changes and value creation is necessary in response to the changing market and consumer behaviors in the age of the fourth industrial revolution.
Rolls Royce, one of the top three aircraft engine makers in the world, makes more than half of the engine business total revenue in the service department by offering “total care” service of maintaining and repairing engines after selling their models.
It was possible because the business model was innovated to integrate manufacturing and service parts.
To create actual business model to enhance productivity and efficiency in industrial sites, a business model innovation from customers’ perspective is necessary in order to provide total service through integration of innovative products and services, rather than simply selling goods.
Secondly, companies need to adopt company visions and new business model with mid-range strategies that suit the characteristics of manufacturing companies. It requires changes in internal system and overall core capacity as well as customer relations, and hurriedly established services cannot meet customers’ demands.
Thirdly, external capacities need to be aggressively utilized. It is not easy for a manufacturer to have service and software capacity. Collaboration with professional companies with research and development experiences in AI, IoT and big data can reinforce service capacity.
Lastly, the government needs to offer policy support for entrepreneurs and regulatory reform to help Korean manufacturers grow competitively in the new era.
It is more important than ever to create innovative business models using information and communication technologies such as AI, IoT and Big Data as new growth engines for creative value innovation of Korean manufacturing sector.
*CEO of Aerix